UNDERSTANDING THE MUNICIPAL PROCUREMENT

1 UNDERSTANDING THE PROCESSMUNICIPAL PROCUREMENT How does the process work?How does it prevent corruption?What are the risks to my company?What can I do if I think there is corruption?BUSINESSESA GUIDE FOR UNDERSTANDING THE PROCESSMUNICIPAL PROCUREMENT How does the process work?How does it prevent corruption?What are the risks to my company?What can I do if I think there is corruption?BUSINESSESA GUIDE FOR UNDERSTANDING THE PROCESSMUNICIPAL PROCUREMENT How does the process work?How does it prevent corruption?What are the risks to my company?What can I do if I think there is corruption?BUSINESSESA GUIDE FOR Table of ContentsINTRODUCTIONUNDERSTANDING THE PROCUREMENT PROCESSIF THINGS GO WRONGTRANSPARENCYBUSINESSES' RESPONSIBILITIESOTHER INFORMATIONABOUT is this booklet about? are the main risks to my business? are the 10 most important things I need to know? can I get to know about opportunities for MUNICIPAL contracts? is the 'list of accredited prospective providers' and how do I get on the list?

2 The PROCUREMENT process the same in each municipality? does the process work? cash - Purchases below R2 quotes - R2 000 to R200 bidding (Tenders) - Above R200 'administrative criteria' can cause my bid to be disqualified? the best and cheapest service provider always win the tender? are the 80/20 and the 90/10 preferential points systems? do these rules apply to Exempted Micro Enterprises? is 'fronting' prevented? the municipality let me know if I was not successful? may sign off on my contract? MUNICIPAL officials and councillors allowed to contract with the municipality? MUNICIPAL officials' and councillors' close families allowed to contract with municipalities? there are so many checks and balances, why is there still corruption? if I don't get paid? can I do if I am approached for a bribe by an official or if I know there was corruption? if I want to dispute a decision? if I lost the bid and want to find out why? I see other companies' tender documents if I was not successful?

3 I see other companies' tender amounts? I see the scoring sheets used by the bid evaluation committee? hear a lot about anti-competitive behaviour. What is this about? are my responsibilities? and to contact2627understanding the MUNICIPAL PROCUREMENT process page 1 Kris Dobie and Namhla Xinwa UNDERSTANDING the MUNICIPAL PROCUREMENT process: A guide for businessesISBN: 978-0-620-68038-7 2015 Ethics Institute of South Africa (EthicsSA)Cover design and layoutLilanie Greyling (Dezinamite Visual Solutions)Published byEthics Institute of South AfricaPO Box 11233 Hatfield 0028 PretoriaSouth AfricaWebsite: : The Copyright is the Creative Commons Copyright It means:EthicsSA grants the right to download and print the electronic version, to distribute and to transmit the work for free, under three conditions: 1) Attribution: The user must attribute the bibliographical data as mentioned above and must make clear the license terms of this work; 2) Non-commercial: The user may not use this work for commercial purposes or sell it; 3) No change of text: The user may not alter, transform, or build upon this work.

4 Nothing in this license impairs or restricts the author's moral - This booklet does not constitute legal Broad Based Black Economic EmpowermentCFO Chief Finance OfficerEME Exempted Micro EnterpriseMFMA MUNICIPAL Finance Management ActMM MUNICIPAL ManagerSCM Supply Chain ManagementTable of ContentsINTRODUCTIONUNDERSTANDING THE PROCUREMENT PROCESSIF THINGS GO WRONGTRANSPARENCYBUSINESSES' RESPONSIBILITIESOTHER INFORMATIONABOUT is this booklet about? are the main risks to my business? are the 10 most important things I need to know? can I get to know about opportunities for MUNICIPAL contracts? is the 'list of accredited prospective providers' and how do I get on the list? the PROCUREMENT process the same in each municipality? does the process work? cash - Purchases below R2 quotes - R2 000 to R200 bidding (Tenders) - Above R200 'administrative criteria' can cause my bid to be disqualified? the best and cheapest service provider always win the tender?

5 Are the 80/20 and the 90/10 preferential points systems? do these rules apply to Exempted Micro Enterprises? is 'fronting' prevented? the municipality let me know if I was not successful? may sign off on my contract? MUNICIPAL officials and councillors allowed to contract with the municipality? MUNICIPAL officials' and councillors' close families allowed to contract with municipalities? there are so many checks and balances, why is there still corruption? if I don't get paid? can I do if I am approached for a bribe by an official or if I know there was corruption? if I want to dispute a decision? if I lost the bid and want to find out why? I see other companies' tender documents if I was not successful? I see other companies' tender amounts? I see the scoring sheets used by the bid evaluation committee? hear a lot about anti-competitive behaviour. What is this about? are my responsibilities? and to contact2627understanding the MUNICIPAL PROCUREMENT process page 1 Kris Dobie and Namhla Xinwa UNDERSTANDING the MUNICIPAL PROCUREMENT process: A guide for businessesISBN: 978-0-620-68038-7 2015 Ethics Institute of South Africa (EthicsSA)Cover design and layoutLilanie Greyling (Dezinamite Visual Solutions)Published byEthics Institute of South AfricaPO Box 11233 Hatfield 0028 PretoriaSouth AfricaWebsite: : The Copyright is the Creative Commons Copyright It means:EthicsSA grants the right to download and print the electronic version, to distribute and to transmit the work for free, under three conditions: 1) Attribution: The user must attribute the bibliographical data as mentioned above and must make clear the license terms of this work; 2) Non-commercial: The user may not use this work for commercial purposes or sell it; 3) No change of text: The user may not alter, transform, or build upon this work.

6 Nothing in this license impairs or restricts the author's moral - This booklet does not constitute legal Broad Based Black Economic EmpowermentCFO Chief Finance OfficerEME Exempted Micro EnterpriseMFMA MUNICIPAL Finance Management ActMM MUNICIPAL ManagerSCM Supply Chain ManagementIntroductionpage 3understanding the MUNICIPAL PROCUREMENT process is this booklet about? are the main risks to my business?It is written to help businesses understand the MUNICIPAL PROCUREMENT is power. By knowing how the process should work, you can hold the municipality accountable to a process which is fair and free from corruption. Remember that the municipality belongs to its citizens, and as a citizen you can (and should) hold them accountable. We also set out what businesses' responsibilities are, and we give some guidance on what to do if you believe you have been the victim of a corrupt PROCUREMENT process. PROCUREMENT values in the Constitution Section 217 of the Constitution says that government PROCUREMENT systems must be fair, equitable, transparent, competitive and cost-effective.

7 These values should guide all PROCUREMENT policies and how they are implemented. You may not get paidIf the municipality does not follow the correct procedure when appointing you as a service provider you may struggle to get paid. This could happen even if you did nothing wrong, but they took short-cuts. If there are disputes the municipality may first want to investigate what happened and you may have to wait a long time for payment, or even go through expensive legal battles. Your contract could be cancelledIf there is fraud or corruption in the PROCUREMENT process the municipality may be entitled to cancel the contract. They can also try to recover any losses from guilty parties. You could go to jailIf you bribe officials you could go to jail. Dependent on the crime and which court it is heard in, the maximum sentences for corruption vary from three years to life imprisonment. If the municipality does not follow correct procedure:If you are involved in fraud or corruption:1 According to the Prevention and Combating of Corrupt Activities Act a bribe is not necessarily just money it can also include gifts, entertainment, favours, loans or any form of 'gratification'.

8 Introduction1 Introductionpage 3understanding the MUNICIPAL PROCUREMENT process is this booklet about? are the main risks to my business?It is written to help businesses understand the MUNICIPAL PROCUREMENT is power. By knowing how the process should work, you can hold the municipality accountable to a process which is fair and free from corruption. Remember that the municipality belongs to its citizens, and as a citizen you can (and should) hold them accountable. We also set out what businesses' responsibilities are, and we give some guidance on what to do if you believe you have been the victim of a corrupt PROCUREMENT process. PROCUREMENT values in the Constitution Section 217 of the Constitution says that government PROCUREMENT systems must be fair, equitable, transparent, competitive and cost-effective. These values should guide all PROCUREMENT policies and how they are implemented. You may not get paidIf the municipality does not follow the correct procedure when appointing you as a service provider you may struggle to get paid.

9 This could happen even if you did nothing wrong, but they took short-cuts. If there are disputes the municipality may first want to investigate what happened and you may have to wait a long time for payment, or even go through expensive legal battles. Your contract could be cancelledIf there is fraud or corruption in the PROCUREMENT process the municipality may be entitled to cancel the contract. They can also try to recover any losses from guilty parties. You could go to jailIf you bribe officials you could go to jail. Dependent on the crime and which court it is heard in, the maximum sentences for corruption vary from three years to life imprisonment. If the municipality does not follow correct procedure:If you are involved in fraud or corruption:1 According to the Prevention and Combating of Corrupt Activities Act a bribe is not necessarily just money it can also include gifts, entertainment, favours, loans or any form of 'gratification'. the bid is awarded the following information must be made available on the website: Contract number and description; name of the successful bidder; the contract price; brands; dates for completion of contracts; and preference points you've won the bid you must be sure that the person signing your contract has the authority to do so.

10 (See question 13 for authority levels.) you were not successful you have the right to know why. You can ask the Supply Chain Management unit informally, but you may also be required to fill in forms to get access to the information. (See question 20 for more on access to information processes.) you have a dispute you can raise it with the MUNICIPAL manager in writing within 14 days of the decision being made. If your concern is not resolved in 60 days you may refer it to the relevant provincial treasury. If it is not resolved there you may refer it to National Treasury. You can also take the matter to court. may be barred from doing business with municipalities, or may have their bids rejected if: They have not performed adequately in previous contracts with organs of state (including municipalities); They, or any of their directors have been convicted of fraud and corruption and have been placed on National Treasury's list of tender defaulters; Their tax matters are not in order with SARS; Their accounts ( rates and taxes) are outstanding formore than three months with any municipality or MUNICIPAL entity; or Any of their directors, managers, principle shareholders are in service of the state.